Systems Blindness: The Illusion of Understanding

Here was the dilemma and opportunity for a major national retailer: its magazine buyers were reporting that close to 65 percent of all the magazines printed in the United States were never sold. This represented an annual cost of hundreds of millions of dollars to the system, but no one party in the system could change it alone.

For years no one could solve this problem; everyone just shrugged. But for the magazine industry, squeezed by the digital media and falling sales, the matter was urgent. So the retail chain — among the biggest customers for magazines in the country — got together with a group of publishers and magazine distributors to see what they could do.

“There was a huge amount of waste, whether you look at it from the perspective of sheer cost, trees cut, or carbon emitted,” Jib Ellison, CEO of Blu Skye consulting, told me. Ellison, who helped convene the group, added, “We find this in most supply chains: they were built in the nineteenth century with a view toward what can be sold, not with sustainability or reducing waste in mind. When one part of the chain optimizes for itself, it tends to suboptimize the whole.”

One of the biggest dilemmas was that advertisers paid according to how many magazines their ads appeared in—not how many were sold. But a magazine “in circulation” might just sit on a shelf for weeks or months, and then be pulped. So publishers had to go back to their advertisers and explain a new basis for charging them.

The retail chain analyzed which were its best-selling magazines in what stores. The chain was able to adjust where magazines went by where they were wanted. All in all, the various fixes reduced waste by up to 50 percent. This was not only an environmental plus; it also opened shelf space for other products while saving beleaguered publishers money.

Solving such problems takes seeing the systems that are in play. “We look for a systemic problem that no one player can solve — not a person, a government, a company,” Ellison tells me. The first breakthrough in the magazine dilemma was simply getting all these players together — and getting the system into the room.

“Systems blindness is the main thing we struggle with in our work,” says John Sterman, who holds the Jay W. Forrester chair at MIT’s Sloan School of Management.

One of the worst results of system blindness occurs when leaders implement a strategy to solve a problem — but ignore the pertinent system dynamics.

“It’s insidious,” says Sterman. “You get short-term relief, and then the problem comes back, often worse than before.”

The problem gets compounded by what’s called the “illusion of explanatory depth” where we feel confidence in our understanding of a complex system, but in reality have just superficial knowledge.

Try to explain in depth how an electric grid operates or why increasing atmospheric carbon dioxide ups the energy in storms, and the illusory nature of our systems understanding becomes clearer.

How do you overcome systems blindness in your work? Please share your insights in the comments section, or tweet them to @DanielGolemanEI (#focus).